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What Can China Learn from US Banking Mistakes?

What Can China Learn from US Banking Mistakes?

by Starling Insights

Starling Insights Editorial Board

May 11, 2023


In a recent article in the South China Morning Post, William R. Rhodes, former Chairman, CEO, and President of Citibank, and Stuart Mackintosh, Executive Director of the Group of Thirty, discuss how China can avoid the mistakes made in US banking culture and supervision as it seeks to redesign its regulatory system.

The recent banking troubles in the US highlight the need for a frank assessment of the failures and faults of many actors. Central bankers and supervisors globally could learn lessons from the mistakes made regarding banking culture, regulation, and supervision, they argue.

As China embarks on a banking regulatory redesign, the American lessons are clear: do not listen to the siren call of lobbying for looser banking rules and regulations.

Instead, the authors argue that the People's Bank of China should enact stricter regulations and ensure supervisors make fewer assumptions when testing more banks. And China's regulators should look to learn from their global peers on the implications of culture and conduct, the impact of firm leadership and board composition, and how they can maintain regulatory rigor and establish sound policies for supervision and stress testing.

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